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Prepress Content: The following article is a preprint of a scientific paper that has completed the peer-review process and been accepted for publication within Economics of Energy & Environmental Policy.
While the International Association for Energy Economics (IAEE) makes every effort to ensure the veracity of the material and the accuracy of the data therein, IAEE is not responsible for the citing of this content until the article is actually printed in a final version of Economics of Energy & Environmental Policy. For example, preprinted articles are often moved from issue to issue affecting page numbers, and actual volume and issue numbers. Care should be given when citing Economics of Energy & Environmental Policy preprint articles.

Economics of Energy & Environmental Policy
Volume 6, Number 2

China’s National Carbon Dioxide Emission Trading System: An Introduction

Lawrence H. Goulder, Richard D. Morgenstern, Clayton Munnings, and Jeremy Schreifels

DOI: *none*
No Abstract

Interactions between Market Reform and a Carbon Price in China’s Power Sector

Fei Teng, Frank Jotzo, and Xin Wang

DOI: https://doi.org/10.5547/2160-5890.6.1.ften
View Abstract

The electricity sector accounts for a large share of China's carbon dioxide emissions and of the economy-wide abatement potential. China's planned national emissions trading scheme would include electricity generation, as nearly all emissions trading schemes do. The critical difference is that in most existing carbon pricing systems the power sector operates with competitive markets and cost-based pricing, while the Chinese power industry still uses a highly regulated dispatch and pricing system. Together these limitations mean that the effect of a carbon price on China is limited in terms of the impact on operational decisions for existing power stations and in terms of the effects on investment decisions. We explore the channels of interaction between electricity market reform and carbon pricing in China, and provide quantitative estimates of the effects and interactions on electricity sector emissions. A probabilistic discrete choice model is used to simulate the behavior of investors in the power sector. The analysis indicates that market reform can help reduce emissions intensity, but to meet China's 2030 targets for non-fossil fuel generation a low to moderate carbon price is also necessary; conversely, a carbon price will only be effective with market reform that provides flexibility in dispatch. Using our simplified quantitative analysis, the carbon price required for the same share of non-fossil fuel generation would be about twice as high without market reform. Combining market reform and a carbon price could achieve significant rates of decarbonization and is likely to be the most effective and most feasibly policy package to cut emissions from China's power sector.

The Future of Russian Gas Exports

Finn Roar Aune, Rolf Golombek, Arild Moe, Knut Einar Rosendahl, and Hilde Hallre Le Tissier

DOI: *none*
No Abstract